Effective January 1, 2012 California employers will be required to comply with new requirements relating to employees and independent contractors.
California law will now impose strict penalties for employers with workers in California found willfully to have misclassified workers as independent contractors. The so-called “Job Killer Act” will levy heavy fines on employers for voluntary and knowing misclassification: penalties will range from $5,000 to $10,000 for the first violation and up to $25,000 for subsequent violations. An employer found to have violated the Act may also be ordered to post, on its website or in another prominent location, a notice relating to the violation. Additionally, the Act prohibits charging a misclassified worker a fee or making deductions from his/her compensation for any purpose arising from the individual’s engagement where such deductions would have been prohibited under the existing California Labor Code if the individual had not been misclassified.
California has also passed the Wage Theft Prevention Act of 2011 (“WTPA”), which requires private employers to provide each new non-exempt employee with a written notice at the time of hiring, in the language the employer normally uses to communicate employment related information, containing information regarding the employee’s pay rate, overtime rate and regular payday, and the employer’s name and contact information, among other specified items. The WTPA also provides for increased penalties for certain minimum wage violations, repeat violations, and failure to comply with final court judgments or Commissioner orders.
Both of these recently enacted statutes follow nation-wide trends of stepped-up enforcement of independent contractor classification and wage payment requirements. California employers in particular should be prepared for increased scrutiny in these and other areas of employment laws, and should take steps to ensure compliance with these statutes before they become effective on January 1, 2012.